stalled hope? the resource conflict risk to myanmar s ... hope? the resource conflict risk to...
TRANSCRIPT
Scott Hickie
November 2014
Stalled hope? The resource conflict risk to Myanmar’s political and economic transition
Published by Open Briefing, 3 November 2014
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Scott Hickie is a senior analyst at Open Briefing. He is a lawyer and former political adviser in the
New South Wales Parliament, with a background in environmental law, natural resource governance
and climate change. He has also worked in the Australian non-governmental sector on international
trade and corporate social responsibility. His research focus is on political risk in resource
management regimes across Southeast Asia. Scott has recently worked on climate change
adaptation for the City of Toronto.
Open Briefing is the world’s first civil society intelligence agency. It is a unique not-for-profit social
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Stalled hope?
The resource conflict risk to Myanmar’s
political and economic transition
Scott Hickie
Contents
Executive summary 1
I. Introduction 2
II. Myanmar’s resource conflict flashpoints 6
Myitsone hydroelectric dam project 7
Letpadaung copper mine 8
Shwe oil and gas project 10
III. Drivers of resource conflict in Myanmar 12
a) Increased foreign direct investment 12
b) Institutional corruption and revenue misappropriation 14
c) Imbalance in resource revenue distribution and benefit sharing 16
d) Delay in decentralisation and sub-national governance reform 20
e) Unravelling of some ethnic state ceasefire agreements 22
f) Land confiscation and environmental degradation 25
IV. Conclusion 27
References 29
Author’s note: This briefing paper uses the official name Myanmar in reference to the country of
Burma/Myanmar. This usage should not be interpreted as a position on the legitimacy of the current
government or main opposition parties, nor the legitimacy of the name change in 1989. In some
instances, this paper refers to pre-1989 names of rivers or cities for ease of recognition. Again,
usage here should not be interpreted in political terms, and is adopted purely for reader familiarity
and comprehension.
All currency figures are in US dollars (USD) unless stated otherwise.
Stalled hope? 1
Executive summary
This briefing paper assesses the trajectory and significance of resource conflict risks and threat
multipliers in Myanmar. The principal findings include:
1. Despite poor institutional settings, increased foreign direct investment is unlikely in of itself
to increase local or regional resource conflict.i Investment industry, type of local business
partners, ability to secure social licence, and specific project footprints will all shape the
contribution of FDI to resource conflict.
2. Select armed ethnic group’s demands for a federal political system are highly likely to
intensify in absence of public finance reform, more transparent resource revenue management
and greater fiscal devolution to states hosting projects. This is likely to result in the fracturing of
some ceasefire agreements, increased ethno-religious communal violence, localised project
sabotage and magnified security risks for business investments.
3. Increasing military securitisation of key energy infrastructure assets, such as pipelines and
hydrodams, is highly likely. They are the lifeblood of Myanmar’s fragile economy and will
continue to be strategic targets if project revenues are allocated solely to the military and
military-affiliated businesses.
4. Armed ethnic groups, particularly in Kachin and Shan states, are likely to attempt expelling
the Tatmadaw (Myanmar armed forces) from these positions or engage in project sabotage
in response to land seizures, human rights abuses, environmental degradation and arbitrary
arrests.
5. The number of internally displaced persons is unlikely to decrease in the next 12 months,
and those trying to return home are likely to experience continued dislocation from land as
a result of opportunistic land grabs.
6. Protests over land grabs and particular infrastructure projects are likely to escalate if
parliament does not act on the recommendations of the Farm Land Commission.
7. Conflation of localised, isolated or project-based resource conflicts within broader ethno-
religious confrontations and communal violence is could possibly be a threat multiplier and
expand the geographic scope of conflict.
8. Armed ethnic groups or nationalist forces could possibly exploit local conflicts and marshal
existing tensions around religion, nationalism, development disparity and ethno-political
competition to attempt nationalising conflict as a strategy to leverage greater political
power. However, the ruling Union Solidarity and Development Party (USDP) and elements
of the military could possibly attempt to mitigate this risk through a divide and conquer
strategy to reduce any existing semblance of ethnic group solidarity.
i Please see http://www.openbriefing.org/intelligenceunit/intelligencemethod/ for an explanation
of the words of estimative probability that Open Briefing uses in its briefings.
2 Open Briefing
Section I Introduction
In 2011, President Thein Sein’s quasi-civilian government initiated one of the most ambitious
economic and political transformation campaigns of the last 50 years. Gone are the days of
international isolation. Sein has painted a vision of Myanmar shedding its pariah status and swiftly
transitioning from one of the region’s least developed countries (see table 1 below) to a dynamic,
emerging Asian Tiger. This is a challenging task after almost five decades of autocratic military rule,
severe impoverishment and destructive armed ethnic conflict.
Table 1. Select social, development and institutional rankings.
Metric Ranking
Human Development Index
(UN Development Programme, 2012)
149 of 187 countries (low human
development)
Civil and Political Freedom rating
(Freedom House, 2013)
Not Free (though improving civil and
political rights)
Press Freedom Index
(Reporters without Borders, 2014)
145 of 177 countries (+24 positions from
2012)
Corruption Perception Index
(Transparency International, 2013) 157 of 177 countries
Index of Economic Freedom
(Heritage Foundation, 2014)
162 of 178 (overall score 46.5 ‘repressed’,
+7.3 from 2013)
Resource Governance Index
(Revenue Watch Institute, 2013) 58 of 58 countries
Myanmar’s estimated 61 million citizens are cognizant the country is endowed with great
geostrategic advantage, sitting between the 21st century’s rising economic powers, China and
India.1 Sein and the USDP are very aware of the comparative economic advancement and growth of
its neighbours, particularly Thailand, whose per capita GDP (in purchasing power parity, PPP) is more
than eight times larger than Myanmar’s (see figure 1 opposite).
The reformist agenda has the potential to steer Myanmar away from historic insecurity and
economic stagnation. With sanctions either removed or eased, new comprehensive aid packages
signed, diplomatic relations rebooted and new bilateral defence ties on the table, a space has
opened for Myanmar to build rule of law, initiate civil and political rights reform and develop a more
inclusive and equitable economic growth trajectory.
Stalled hope? 3
Figure 1. GDP per capita (PPP) in US dollars. Data from the World Bank and Trading Economics.
These rags to riches aspirations give great hope after false starts in breaking from military
dictatorship. But they also conceal complex, multidimensional political and economic challenges.
Leveraging significant endowments of natural resources to achieve sustainable security, lasting
political settlements with ethnic states and economic growth that supports human development
will be difficult.
The transition process involves a risk that unsatisfactory institutional settings, development
asymmetry between central Myanmar and its ethnic periphery and fractured political identities will
conspire to reignite interwoven resource, intercommunal and ethnic conflict.ii Resource conflict
poses an ongoing challenge to Myanmar’s reform process. While it is unlikely to permanently derail
Myanmar’s political reform, it is likely to fuel continued, episodic armed conflict between some
ethnic armed groups and temporarily stall future political negotiations. The capability of Naypyitaw
to successfully manage resource development in a post-conflict society will be central pillar of a
peaceful transition.
Myanmar is divided into seven states along the resource-rich border areas, each named after one of
the seven largest ethnic minority groups, and seven regions (formally divisions), which are largely
inhabited by the majority Bamar (see figure 2 overleaf). Natural resource governance and conflict
over resources play a particularly critical role in shaping ethnic state grievances and political
demands, but also exacerbate widespread public dissent over land seizures and contribute to armed
conflict (see figure 3 overleaf). Establishing appropriate institutional, operational, cultural and
regulatory settings for natural resource governance will be fundamental to Naypyitaw’s political
dialogue with ethnic states and addressing economic and infrastructure development inequity.
ii The ongoing intercommunal violence in Rakhine/Arakan state, though having some dimensions of
a conflict rooted in land issues, is beyond the scope of this report.
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2008 2009 2010 2011 2012
Myanmar
Cambodia
Laos
India
Vietnam
Philippines
Indonesia
Thailand
4 Open Briefing
Figure 2. State and region boundaries of Myanmar. Copyright © Oxford Burma Alliance.
Figure 3. The links between natural resource governance and critical reform issues.
Allocation of resource
ownership and management
roles
Land management
and confiscation Allocation of resource
revenues and project benefits
Ceasefire agreements and
political dialogue
Natural resource
governance
Public finance reform, anti-
corruption and fiscal devolution
IDPs, human insecurity, protests, business
Stalled hope? 5
The key drivers of resource conflict risk in Myanmar include: increasing foreign direct investment
(FDI), institutional corruption and revenue misappropriation, imbalances in revenue distribution,
delays in political system decentralisation, unravelling of some ethnic state ceasefire agreements,
and land confiscation and environmental degradation. This briefing paper assesses the trajectory
and significance (see table 2 below) of these macro-level risks and threat multipliers of resource
conflict. By way of context, it first explores three major resource conflict flashpoints in the country:
the Myitsone hydroelectric dam project, the Letpadaung copper mine and the Shwe oil and gas
project.
Table 2. Risk analysis of drivers impacting on resource conflict. (The overall risk RAG status – red,
amber, green – is shown in left-hand column.)
Risk Probability Impact
Increased foreign direct
investment High Low
Institutional corruption and
revenue misappropriation Medium High
Imbalance in resource revenue
distribution and benefit sharing High Medium
Delay in decentralisation and sub-
national governance reform Medium High
Unravelling of some ethnic state
ceasefire agreements Medium Very High
Land confiscation and
environmental degradation Very high High
6 Open Briefing
Section II Myanmar’s resource conflict flashpoints
Due to Myanmar’s historical international isolation, weak institutions, anaemic economic
development and previously military-controlled government, natural resource development has not
been balanced or used as leverage for social and economic development.
Natural resource exploitation cannot be ignored in examining Myanmar’s armed conflict and
insecurity, particularly after the 1988 uprising. Teak and jade trade and export,2 often illicit in
nature, provided a financing mechanism for arms and weapons procurement.3 Major oil and gas
revenues have underwritten the growth of the Tatmadaw (armed forces) both in terms of helping
Myanmar build an army of almost half a million personnel, one of Asia’s largest, and by providing
capital for military and business ventures.
In a climate of international sanctions, many resource exploitation and export activities were
considered illegal for international importers and investors. Resource exploitation was a means to
an end for the junta, with the end being financing superior military and arms capability. The race to
the bottom in terms of resource extraction, resource curse affected economy and general instability
created a type of natural resource fatalism. Natural resource management was totally unregulated,
leaving excessive environmental degradation, diminished capacity for rural livelihoods and local
resentment.
Over the last decade, a number of large extractive and energy infrastructure projects have resulted
in isolated, sporadic protests, dissent and violence.4 Schemes such as the Myitsone hydroelectric
dam project, the Letpadaung copper mine and the Shwe oil and gas project receive occasional
coverage in the international media, partly because disruption, conflict and political challenge is
perceived as a weather vane for Myanmar-Sino relations and the progress of Sino energy security
strategies.5 However, project sabotage, securitisation and protest are an equally viable gauge for
ethnic group power dynamics vis-à-vis Naypyitaw and broader political grievance.
The following pages explore the three major projects mentioned above, as they are significant
resource conflict flashpoints. However, a proliferation in small- to medium-sized hydroelectric dam
projects and industrial-scale agriculture is likely to dwarf the big name mega projects as market
accessibility for Myanmar’s natural resource riches improves. The proliferation of smaller-scale
natural resource sector activities could have positive economic distribution effects. However, if
businesses do not improve the standard of living of local communities, conflict and violence could
become more disaggregated, rather than centralised around large resource project flashpoints.
Stalled hope? 7
Myitsone hydroelectric dam project
The proposed $3.6 billion 6,000 megawatt Myitsone hydroelectric dam project is located at the start
of the Ayeyarwaddy/Irrawaddy River in Kachin state, 42 kilometres north of the state capital,
Myitkyina (see figure 4 below). It is being developed by China’s state-owned China Power
Investment Corporation (CPI) and Myanmar’s Asia World Company. Myitsone dam is the largest and
highest profile of a proposed $20 billion seven dam cascade slated for construction along the
Ayeyarwady, Mali and N’Mai rivers.
Figure 4. Location of the Myitsone hydroelectric dam project. Copyright © Google Earth, 2014.
National civil society groups, Kachin authorities, local communities and international NGOs have
consistently opposed dam construction in the area. Serious concerns have been raised over
upstream and downstream environmental degradation, safety issues, local community dislocation
and destruction of cultural heritage. It has also been criticised over unfair project-benefit sharing
because the majority of electricity generation is destined for China’s transmission system (it is
anticipated that the project will generate 90% of Yunnan Province’s electricity).
8 Open Briefing
The reservoir surface area is anticipated to be 766 square kilometres. According to environmental
assessment documentation,6 building the dam could necessitate the relocation of over 15,000
mostly ethnic Kachin residents. Reports suggest over 300 households from Tanphye, Padan and
Myitsone villages have been relocated to date – some forcibly by the Myanmar military – with many
relocated residents expressing deep dissatisfaction with the compensation received.
Dam construction has sparked consistent protests within Kachin state and at Chinese embassies
around the world. In April 2010, three bombs were detonated at the Asia World Company worker
camp, killing four workers. In March 2011, Kachin Independent Organisation (KIO) published an open
letter to then Chinese President Hu Jintao warning that civil war could erupt in the region if the dam
project was to go ahead. A delegation of the Arakan National Party (ANP) and the Kachin chapter of
the National Democratic Force (NDF) visited Beijing in June 2014 at the same time as Sein at the
invitation of Chinese leaders. The delegation clearly indicated that resumption of the dam would
harm ties between the China and Myanmar.
In September 2011, Sein suspended dam construction until the 2015 election, with significant
domestic and international implications. Domestically, it presented Sein as a president who listens
to the people and gave weight to the idea that things were changing in Myanmar. Some analysts
interpreted the suspension as a popularist response to rising anti-Chinese sentiment and a means
for Sein to demonstrate to powers such as the EU, United States and India greater Myanmar
autonomy in international relations. The US embassy in Yangon had provided some financial support
to organisations opposing the dam, and the Washington welcomed the decision to suspend
construction. In contrast, Chinese diplomats and state media expressed significant disappointment
with Sein’s announcement. During Sein’s June 2014 visit to Beijing, Chinese leaders are highly likely
to have pressed Sein on a number of stalled Chinese-Myanmar projects, including the Myitsone dam.
In October 2014, a coalition of environmental groups, Salween Watch, suggested that the recent
escalation in fighting between Karen state groups and the Myanmar Army and local Border Guard
Force is a result of the Union government trying to clear the way for dam construction at multiple
sites along the Salween River. Salween Watch suspects that the armed conflict is aimed at moving
populations away from the Hut Gyi dam area, the site of one of the major hydropower projects
slated for the Salween River in Shan, Kayah and Kayin (Karen) states.
Letpadaung copper mine
The Lepandaung copper mine is a joint venture project between Chinese state-owned company
Wanbao Mining, Myanmar state-owned company Union of Myanmar Economic Holdings Limited
(UMEHL) and the Myanmar government. The Letpadaung deposit is one of four significant copper
deposits located in west central Myanmar, approximately 24 kilometres from Monywa in Sagaing
region (see figure 5 opposite). The deposit is estimated to hold as much as 3.8 million tonnes of
copper – enough to produce 125,000 tonnes a year for 25 years.
Stalled hope? 9
Figure 5. Site of the Letpadaung copper mine. Copyright © Google Earth, 2014.
The mine has been criticised by some after more than 3,000 hectares of land was confiscated from
an estimated 26 villages. In late 2012, local farmers and Buddhists led an 11-day occupation of the
mine over issues related to land compensation, degradation and destruction of religious sites and
pollution from the mine. The government ordered riot police to disperse the protestors who used
white phosphorus on protestors, which resulted in more than 70 protestors being injured. The
government response was criticised, and in the aftermath of the confrontation, mine operations
were suspended and a parliamentary commission established to investigate the project.
The parliamentary committee, led by opposition leader Aung San Suu Kyi, reviewed the project and
determined the mine operations could proceed if the company addressed the social and
environmental impacts. Some limited mine operations were resumed in September 2013 after new
agreements were signed between the mine operators, Wanboa and UMEHL, and the central
government, which gave the government a much larger stake in revenues from the mine. Most of
this work is focused on Wanbao undertaking new environmental and social impact assessments with
communities in early 2014. It is not clear whether Wanbao corporate social responsibility (CSR)
programmes are arresting community concerns. In May 2014, activists purportedly from Yangon
Public Service Network kidnapped three Wanbao workers and made demands relating to Wanbao’s
operations. The last report from the UN special rapporteur on the situation of human rights in
Myanmar noted that Wanbao had not implemented the recommendations of the parliamentary
committee.7
10 Open Briefing
Shwe oil and gas project
The Shwe oil and gas project incorporates natural gas and crude oil processing facilities and a dual
2,500/2,800 kilometre respectively oil and gas pipeline corridor from Arakan state in western Burma
to Yunnan Province and Guangxi Zhuang Autonomous Region in China. The pipeline corridor
traverses Arakan state, Magway region, Mandalay region and Shan state.
The project involves the exploitation of natural gas reserves estimated at 4.5 trillion cubic feet (tcf)
off the coast of Arakan state and the transport of Middle Eastern and African oil from port facilities
in Arakan. The export of natural gas has historically delivered almost 90% of foreign exchange for
Myanmar. It is estimated that the production and sale of natural gas will generate over $54 billion
for the Myanmar regime over the next 30 years.
The establishment of a special economic zone has encouraged complementary industrial
development around the deep-sea port and natural gas and crude oil processing plants. The use of
such zones has been highly contested in Myanmar and in the Shwe oil and gas project in particular,
as they include concessional income tax rates for companies and necessitate extensive government
security protection.8
Many grievances over the project are similar to other large-scale infrastructure projects in Myanmar.
In the same way lack of local electricity in Kachin state enflames grievances about considerable
hydroelectricity export to Yunnan Province in China, the priority given to exporting natural gas from
the Shwe project ahead of domestic use has inflamed local tensions. Land confiscation, forced
relocation, environmental damage and military occupation along the pipeline corridor has led to
sporadic, low-level conflict. Continued conflict is possible, as the pipeline corridor crosses contested
areas in the northern Shan state and areas occupied by the Kachin Independence Army (KIA), the
Kachin Defence Army (KDA) and the Shan State Army-North (SSA-N) (see figure 6 opposite).
Myanmar ranks as 39th in the world in terms of proven natural gas reserves and 72nd in proven oil
reserves, despite considerable underinvestment in exploration. Myanmar has released over 100 new
onshore and offshore oil and gas blocks for exploration. At present, approximately 22 companies
are operating across 20 offshore and 17 onshore blocks. The Shwe oil and gas project is not the first
large-scale extractive-industry project to trigger conflict. The Yadana offshore gas fields in the
Andaman Sea contain more than 5 trillion cubic feet (140 billion cubic metres) of natural gas, with an
expected field life of 30 years. Both offshore and onshore pipelines transport natural gas through
Mon and Kayin (Karen) areas in southern Myanmar and into Thailand. These projects have also been
subject to limited claims of human rights abuses, land confiscation, poor labour practices and
environmental degradation.
Stalled hope? 11
Figure 6. Shwe oil and gas pipelines and military positions. Copyright © Shwe Gas Movement.
12 Open Briefing
Section III Drivers of resource conflict in Myanmar
Issues surrounding the exploitation of natural resources are closely interlinked with the national
political economy in Myanmar. Natural resources are critical for national government balance
sheets, emerging political identities and claims to self-autonomy staked on resource ownership or
stewardship.
Key drivers influencing potential resource conflict are increased foreign direct investment,
institutional corruption and revenue misappropriation, imbalance in revenue distribution, delay in
political system decentralisation, unravelling of fragile ethnic state ceasefire agreements, and land
confiscation and environmental degradation. There is feedback loop between these key drivers of
resource conflict risk and actual resource conflict; the majority of key resource conflict drivers are
reciprocally influenced by the presence of resource conflict. The findings of a risk assessment of
these principal drivers are outlined in the following pages.
a) Increased foreign direct investment
Risk Probability Impact
Increased foreign direct
investment High Low
The probability of increased foreign direct investment occurring is assessed as high, but the
impact on resource conflict is assessed as low. The overall risk of increased foreign direct
investment is therefore medium.
Myanmar opened up limited sectors for foreign investment in 1988. The State Law and Order
Restoration Council (SLORC) maintained strong administrative oversight of FDI authorisations.
Sanctions imposed by Western countries after the military junta’s violent response to the 1988
popular uprising led to limited diversity among foreign investors and provided uncontested
opportunities for Chinese and ASEAN investment. Chinese and Thai FDI has dominated investment
inflows (see figure 7 opposite). Thailand and China (including the special administrative regions) are
also key importers of Myanmar goods and services, to the tune of 41.6% and 21.1% respectively
(2010 figures).9
Stalled hope? 13
The dominance of Chinese investment in Myanmar has, in part, led to national political concerns and
strong anti-Chinese sentiment within major project footprints. Sein’s suspension of the Myitsone
dam project until 2015 tapped into nationalistic rhetoric on unpopular Chinese investment and
concern over strategic dependency on Beijing. Problems with major projects, including the three
discussed in the previous section of this report, and increasing FDI competition resulting from the
easing and removal of sanctions are likely to temper Chinese investment flows in future.iii
Figure 7. Share of total ‘permitted’ FDI in Myanmar by country (1989-2012).10
Speculation that a series of bombing across Yangon, Mandalay, Taungoo, Sagaing and Nanhkan in
October 2013 was aimed at scaring away foreign investors, whether rumour or reality, does point to
the sensitivities around foreign direct investment. However, it is uncertain whether local
communities have reservations over foreign direct investment generally or whether objections are
based on recent experiences with Thai and Chinese FDI specifically.
Whether the nationality of the investor alters local reception of FDI or not, the particular terms of
investment are important, particularly where foreign firms are provided tax free periods. Social
licence, tangible returns for local communities and project-related community development are all
important. As such, US, Canadian, Japanese and European investors claim that social, environmental
and human rights benchmarks will give their investment proposals a competitive edge over existing
market participants and mitigate the negative social impacts associated with a number of major
Chinese infrastructure projects in Myanmar.
iii
Chinese investment fell dramatically in the fiscal year 2012-13 to just $407 million, compared to
$12 billion for the period 2008-11, of which $7.5 billion was disbursed in 2011.
14 Open Briefing
Even those foreign investors with genuine intentions to apply strong investment ethics may be
foiled by institutional corruption and cronyism within key public service agencies and departments.
Investors could also risk becoming involved with USDP-associated business partners and companies
that then become entangled in anti-USDP political dissent. Investment partnerships that appear to
predominately enrich the USDP political elite may be particularly exposed to local disruption.
Another factor to consider is whether community opposition could be linked to the type of sectors
drawing investments. In Myanmar this is predominantly the primary and extractive industry
sectors.iv
According to Myanmar Investment Commission data, the accumulated FDI totals $36
billion up to May 2014 (including pre-1988 FDI), with approximately 36% of FDI going to the power
industry and 37% directed into the oil and gas sector.11
Disproportionate investment in large-scale
resource projects and export-orientated commodity production is likely to create inflationary
pressures, currency appreciation and potential resource curse dynamics. These economic impacts
have a disproportionate effect on those already living below the poverty line, and thus inflame local
tensions.
b) Institutional corruption and revenue misappropriation
Risk Probability Impact
Institutional corruption and
revenue misappropriation Medium High
The probability of institutional corruption and revenue misappropriation occurring is assessed
as medium, and the impact on resource conflict is assessed as high. The overall risk of
institutional corruption and revenue misappropriation is therefore high.
Anecdotal evidence suggests that corruption and misappropriation pervades many Myanmar
institutions, from the highest levels of public finance management to the coalface of government
administration. Transparency International reports predating the beginning of reforms in 2011-12
suggest that corruption is endemic within the government bureaucracy and the judiciary.12
It seems
one of the main objectives of public office holders is to enrich members of the armed forces and
their families. In his inaugural speech, Sein clearly recognised the link between addressing
corruption and the provision of fundamental human rights; the president committed the new
regime to ‘fighting corruption in cooperation with the people’. Despite improvement, there is likely
to be ongoing high levels of institutional corruption in Myanmar – as evidenced in the 2014
Myanmar business survey from the UN Economic and Social Commission for Asia and the Pacific.13
iv
While some indicators show that tourism and manufacturing are capturing a higher than expected
share of FDI, it is anticipated that the natural resources and primary industry sectors, particularly
mining, forestry, large-scale agriculture and oil and gas, will be dominant FDI targets.
Stalled hope? 15
Reports of alleged corruption are reflected in Myanmar’s consistently poor ranking in Transparency
International’s Corruption Perception Index. While Myanmar still ranked poorly in the 2013 index
(157 of 177, with an overall score of 21/100), there is significant improvement in reduced
perceptions of corruption from the 2012 index (172 of 176, with an overall score of 15/100) and
2011 index (180 out of 182, with an overall score of 1.5/10). However, consistently poor rankings in
the index reflect major discrepancies in and unaccountable use of resource revenues.
Revenue earnings from exports from the Yetagun and Yadana offshore gas fields to Thailand
generated since 1998 and 2000 respectively have accounted for approximately 45% of total
exports, and is Myanmar’s largest foreign income source. According to civil society groups such as
Arakan Oil Watch, these revenues do not enter the public accounts and are not managed in the
national budget.14
Instead, the speculation is that state-owned corporations, including the Myanmar
Oil and Gas Enterprise (MOGE)v and the Union of Myanmar Economic Holding Limited, hold the
majority of gas revenues in offshore third-party accounts in Singapore, China and Dubai. It is
suggested that Myanmar authorities make direct transfers from offshore accounts to procure goods
and services for import, in particular military equipment and weapons.15
The non-disclosure of historical gas revenues and suspicion that funds are used to support the
modernisation of the Tatmadaw is likely to reinforce the position of resource industries as high-
value targets for armed ethnic groups and underscore anti-USDP sentiment. Ethnic groups and
communities that experience the negative impacts of projects without sufficient compensation are
further antagonised by the reinforcement of outstanding political grievances.
For a country where conservative estimates place approximately a third of the population below the
poverty line of $1.25 a day, large-scale corruption will erode the legitimacy of reform efforts in the
eyes of both domestic and international stakeholders. Furthermore, the everyday experiences of
citizens with corruption and cronyism within government agencies can be equally corrosive.
Bureaucratic corruption involving land, licences and citizenship, though more difficult to quantify
and measure, leads to sporadic and isolated incidents of communal violence.
A secondary dimension of the failure to insulate public financing and fiscal management from
corruption is the further warping of Myanmar’s tax-to-GDP ratio – with tax standing at 3.2% of GDP
(excluding resource revenues).16
The disproportionately small tax revenue is further diminished by
corrupt practices. It also creates powerful ministerial fiefdoms that spend as they please and remit
the remainder to a consolidated national account.
Despite the scale of corruption and revenue misappropriation there has been some positive reform
likely to improve national revenue and transparency in budgetary accounting. The floating of the
national currency (kyat) will reduce the historical variance between official (fixed) exchange rates
and market exchange, thereby removing the dual exchange rate system, which led to large portions
of government revenue being unaccounted for.17
v Myanmar Oil and Gas Enterprise (MOGE) is the only company authorised to partner with foreign
companies for oil and gas exploration and production in Myanmar.
16 Open Briefing
In December 2012, Sein publically announced that Myanmar would take steps to implement the
Extractive Industries Transparency Initiative (EITI). The EITI board’s approval of Myanmar’s EITI
candidate status in July 2014 is a positive sign that the president’s office has followed through with
the early stages of the EITI implementation process, and is now obligated to implement greater
revenue transparency measures and public finance reforms. This will resolve some of the systemic
weaknesses that enable broad-scale corruption and represents a significant change from the
management of resources during the military-government era, which has remained a political sore
point. The formal creation of the Anti-Corruption Commission as mandated by the 2013 Anti-
Corruption Act would indicate that some MPs are serious about addressing institutional corruption.
Judiciary independence from the executive branch of government could also mitigate institutional
corruption risks and give a clear indication to the Myanmar citizenry that there are non-violent,
official avenues to pursue government and public sector corruption. However, in September 2013,
the UN special rapporteur on the situation of human rights in Myanmar, Tomás Ojea Quintana,
reported that there is little evidence of judiciary independence emerging.18
A legal community de-
skilled by years of military targeting further compounds the lack of an independent judiciary.
c) Imbalance in resource revenue distribution and benefit sharing
Risk Probability Impact
Imbalance in resource revenue
distribution and benefit sharing High Medium
The probability of an imbalance in resource revenue distribution and benefit sharing occurring
is assessed as high, and the impact on resource conflict is assessed as medium. The overall risk
of an imbalance in resource revenue distribution and benefit sharing is therefore high.
Corruption and misappropriation are one obvious element of poor public finance management and
resource governance. More insidious perhaps than wholesale expropriation can be extreme
imbalances in revenue distribution, which can just as equally foster political grievances that
translate into violence, dissent, sabotage and, in extremis, insurgency.
The sharing and distribution of resource revenues are often highly contested in Myanmar, given the
presence of disputed internal borders, asymmetries in development and resource impacts, and
insurgency and potential Balkanisation. Imbalances in the distribution of resource revenue to
resource-rich ethnic states that host large-scale extractive industry projects become political capital
to empower dissent and conflict. This is particularly so in the context of development inequity,
limited civil rights, suppressed media and military elite patronage networks.
The management of extractive industries exists within a virtual institutional vacuum, delivering
major financial resources to USDP- and military-affiliated patronage networks and the central
Myanmar states. In fact, Resource Watch Institute ranked Myanmar last (58th out of 58) in the 2013
Resource Governance Index.19
Myanmar rated extremely poor on the index due to high-level
corruption, extremely limited accountability of expenditure of resource revenues, ineffectual
regulation and the absence of institutional oversight of natural resource projects.
Stalled hope? 17
Myanmar’s GDP growth has increased significantly across the 2000s with increasing mineral sales
and major increases in sales of natural gas. The percentage of GDP spent on the Myanmar military
has also increased, from 1.6% in 2005 to 4.5% in 2013. In of itself this increase does not sound
significant, but when understood in the context of significant GDP growth represents a notable
increase in military spending. The average percentage of GDP spent on the military between 1995
and 2005 was 2.2%; between 2011 and 2013vi
the average was 3.9%.20
That arms procurement as a component of gross military expenditure has increased (absolute value
terms) is evident in arms import data from the Stockholm International Peace Research Institute
(SIPRI), which shows an increase in 2011 and higher (though declining) than previous import levels in
2012 and 2013 (see figure 8 below).21
While the trend-indicator value (TIV) for arms imports as a
ratio of GDP was historically larger between 2002 and 2006, the absolute value of TIV is much larger
between 2011 and 2013. The fact that arms procurement was more significant as a ratio to GDP
when the overall military expenditure to GDP was relatively lower between 2001 and 2005 could
indicate a number of scenarios. One scenario could have been opportunistic weapons procurement
contracts with key trading partners achieved on concessional terms of deferred payment. There
may also be scenarios under which procurement outstripped military wages and maintenance
budgets.
Figure 8. GDP compared with total trend-indicator value (TIV) of arms imports.
Data from Trading Economics and the SIPRI Arms Transfer Database.22
vi
Note, the availability of data has affected the years selected for comparison, as there is no reliable
data for 2006-10. Spending on military forces between 2006 and 2010 may have been significant,
and if included, there may not have been an increase in military expenditure as a percentage of GDP
between 1995-2005 and 2011 onwards.
18 Open Briefing
Expenditure of natural resource revenues on military imports and procurement has underscored the
militarisation of major asset protection, as demonstrated in the case of the Shwe oil and gas
pipelines, and intensified the lethality of armed conflict. Unsurprisingly, major investors in
infrastructure in Myanmar have also been important arms exporters to the country, with China
providing 45%, 69% and 58% of total arms exports in 2011, 2012 and 2013 respectively. As major
projects have become the economic lifeblood of the incumbent regime, armed ethnic groups have
focussed their attacks on infrastructure as a way of disrupting Tatmadaw military modernisation
and advantage.23
Beneath this macro-level grievance over revenue sharing exists equally potent localised
dissatisfaction with Naypyitaw. Myanmar faces significant infrastructure deficit that compounds
economic disadvantage and poor development outcomes in health and education. For example, less
than 20% of Myanmar’s 152,000-kilometre road network is paved, only 1.1% of the population are
internet users, and 21% of the rural population are without improved water access. Not only does
this infrastructure deficit hamper further investment, but it means that people experience the
results of imbalanced resource revenue distribution and benefit sharing in their everyday lives.
State or region Rural poverty
incidence (%)
Urban poverty
incidence (%)
Total poverty
incidence (%)
Kayin (Karen) 12 8 12
Yangon 17 14 15
Mon 21 23 22
Sagaing 27 22 27
Ayeyarwaddy 30 24 29
Bago (E) 30 35 31
Bago (W) 34 23 33
Kayah 38 26 34
Taninharyi 37 21 34
Rakhine 41 26 38
Mandalay 45 24 39
Shan (S) 44 26 40
Magwe 44 26 42
Kachin 47 38 44
Shan (N) 55 35 51
Shan (E) 56 37 52
Chin 81 46 73
Table 3. Poverty headcount index (%).24
Stalled hope? 19
Economic disadvantage, corruption and infrastructure deficit are likely to be understood as
components of ethnic competition and rising Burmese nationalism. This is particularly evident in the
disproportionate poverty incidence rate in the ethnic states, in particular Chin, Shan and Kayin
(Karen) (see table 3 opposite).
Resource projects to date have only amplified these dynamics. For example, projects such as the
Shwe processing plants and Myitsone dam have created community expectations around social
development, particularly electrification. The Myitsone dam project was primarily intended to
export approximately 90% of the electricity generated to the neighbouring Yunnan Province in
China. Yet there is staggering demand for industrial and residential electrification within Myanmar,
with 74% of the population lacking access to power.25
The country consumed 110 kilowatt hours
(KWh) per capita in 2011 was at 110 KWh – far lower than many of its South and South East Asian
neighbours (see figure 9 below).
Figure 9. KWh per capita in select South and Southeast Asian Countries (2004-11).
World Bank data.26
Highly contested employment opportunities associated with new international investment and the
ancillary sectors benefiting from major projects have also caused social tension. Official estimates
of 4% unemployment are likely to grossly underestimate what National League for Democracy
(NLD) opposition leader Suu Kyi described to the World Economic Forum an ‘unemployment time
bomb’.27
A parliamentary committee income and employment survey reported in January 2013 that
Myanmar’s unemployment rate is approximately 37%.28
The combination of systemic
unemployment, unequal development opportunities and an emerging youth bulge who were born
after the unsuccessful 1988 uprising (an estimated 25-27% of the population are under 14 years old)
is likely to exacerbate existing social and political fissures.29
In some of the poorest ethnic states,
lack of legitimate industry, poverty, need for arms funding and general absence of national law
enforcement has given rise to illicit drug cultivation (see figure 10 overleaf).30
20 Open Briefing
Figure 10. Map of poppy growing fields in Myanmar (2013). Copyright © Myanmar Peace Monitor.
d) Delay in decentralisation and sub-national governance reform
Risk Probability Impact
Delay in decentralisation and sub-
national governance reform Medium High
The probability of a delay in decentralisation and sub-national governance reform occurring is
assessed as medium, and the impact on resource conflict is assessed as high. The overall risk of
a delay in decentralisation and sub-national governance reform is therefore high.
Parliamentary representation and constitutional reform have dominated dialogue on Myanmar
democratic reforms. Provisions reserving 25% of parliamentary seats for the military and
constitutional restrictions preventing candidates with foreign family members from assuming the
presidency – with the implication that NLD leader Suu Kyi is ineligible – remain intact. For
international audiences and stakeholders, these elements are the litmus test for Myanmar
democratic reform. The use of existing ethno-communal conflicts for political ends in the first half
of 2014 indicates ongoing tensions over NLD parliamentary representation after the 2015 elections.
In early July 2014, a fake memo purported to be authored by the NLD was circulated on social media
by unconfirmed sources, which claimed that the NLD would be using clashes in Mandalay between
Muslims and Buddhists as a pretext to protect Muslim populations.31
Stalled hope? 21
Harder to measure for international observers, but of equal importance, are decentralisation,
devolution and sub-national governance reform. These are critical components of political
settlements with ethnic states, particularly in states with an abundance of resources and that host
major infrastructure projects. However, there are a number of constraints on increasing sub-
national capacity to govern. Firstly, the 2008 constitution provides a less than ideal governance
model for devolution to sub-national governments. Secondly, there has been very limited fiscal
devolution to date, which severely restricts the functionality of sub-national governments.
Transfers from the Union to the states and regions represent approximately only 3.6% of total
central government expenditure (see figure 11 below).32
Without a federal structure through which
Union revenues can be apportioned and distributed, local resentment towards Naypyitaw is likely to
continue.
Figure 11. Share of the Union budget transferred to state and region budgets (2013-14).
Data from the Asia Foundation.33
Ceasefire agreements focused on cessation of armed conflict have consistently failed to include a
roadmap for political reform. In fact, political settlements on issues such as regional autonomy,
parliamentary representation, intergovernmental income transfers and governmental
responsibilities are intentionally excluded from most ceasefire agreements. Problematically,
Myanmar cannot move forward without negotiating some form of limited ethnic state autonomy
sufficient to allow these states to determine the management of natural resources and receive a
greater dividend from resource projects. Of equal importance is space for ethnic states to reflect
religious and cultural differences, particularly those with significant Christian and Muslim
communities.
96.40%3.40%
0.20%
Union budget for central institutions
Transfer to states and regions ('aid'/'grants')
Transfer to states and regions ('loans')
22 Open Briefing
However, The USDP and military are high likely to harbour trepidation at such ‘federalist’
arrangements. They continue to cast any federalism project in Myanmar as a slippery slope towards
regional succession and the dissolution of Myanmar into independent states.34
Specifically, they fear
that local militias seeking new income streams from resource revenues to rearm and pursue full
independence will capture state-level political institutions. Some may also fear potential threats to
territorial integrity in the border regions if armed ethnic groups become proxies for neighbouring
powers, for example the United Wa State Army and China. As such, developing the rule of law more
generally is critical to the national government finding a balanced form of federalism for Myanmar.
e) Unravelling of some ethnic state ceasefire agreements
Risk Probability Impact
Unravelling of some ethnic state
ceasefire agreements Medium Very High
The probability of the unravelling of some ethnic state ceasefire agreements occurring is
assessed as medium, and the impact on resource conflict is assessed as very high. The overall
risk of the unravelling of some ethnic state ceasefire agreements is therefore high.
Myanmar has experienced multiple attempts to deliver lasting ceasefires with armed ethnic groups
since independence. From the 1963-64 peace parley under General Ne Win to the 1989 SLORC-
sponsored ceasefires and Sein’s Union peace-making initiative, no peace and reconciliation process
has delivered sustainable and lasting peace. In some cases, borderlands under the control of over 20
armed ethnic forces have actively prevented any military control or government authority in post-
colonial times.
Despite the laudable progress under Sein, Myanmar remains divided by historical legacies of
colonial partitioning, military campaigns of ‘Burmanisation’ and the economic and social
marginalisation of ethnic minorities. Such minorities make up 30-40% of the total population and
occupy 57% of Myanmar by land mass. Prior to 2011, successive regimes had habitually understood
minority economic and political grievance as a security threat that could only be suppressed with an
armed response. Five decades of sporadic armed conflict between ethnic armies and the Tatmadaw
have solidified divisions. The relationship between the central regions and periphery ethnic states is
likely to remain an accelerant for political and armed conflict. Figure 12 opposite shows that key
conflict hotspots between 2000 and 2011 have been in Kayin (Karen) and Shan states, and figure 13
opposite shows internally displaced person (IDP) camps, which are generally aligned with key
conflict zones. It should be noted that figure 14 does not capture significant conflict in Kachin State
that has occurred since 2011. The locations of IDP camps in figure 15 does provide some insight into
recent conflict in Kachin State, in particular the large number of armed group IDPs in the southeast
of the state, near the Shan State border.
Stalled hope? 23
Figure 12. Geographic information from the PRIO Armed Conflict Dataset (2000-11)
overlaid on a Google Earth map of Myanmar. The red dots indicate conflict events;
multiple conflict event zones are highlighted in blue.
Figure 13. Map of IDP camps in Myanmar (2012).
Copyright © Myanmar Peace Monitor.
24 Open Briefing
The unpredictable, fragile and tenuous nature of the ceasefire agreements has been demonstrated
by the protracted, high-intensity armed conflict between the Kachin Independence Army (KIA) and
the Tatmadaw. Kachin state had experienced almost 17 years of ceasefire until the Sein government
came to power – taking the reins of the quasi-civilian government on a platform of reform and
reconciliation.35
However, between June 2011 and January 2013, regular clashes between the KIA
and the Tatmadaw resulted in allegations of serious and systematic human rights violations and
over 100,000 internally displaced persons36
throughout Kachin and the northern-most part of Shan
state. Fifty thousand people are still displaced within Kachin state according to an August 2013 UN
special rapporteur report.37
While more recent conflict is not as regular as previous armed
confrontation, reports indicate ongoing campaigns by both sides in Kachin and northern parts of
Shan State.38
The most troubling aspect for both domestic and international observers was the continual and
disproportionate show of force from the Tatmadaw despite several announcements from Sein that
military operations had temporarily ceased – sparking speculation over Sein’s ability to control the
military. Chinese mediation of Kachin-Naypyitaw talks in February 2013 and US, British and EU
interest in mediation efforts suggest that major powers are wary about the potential unravelling of
ceasefire agreements.
Furthermore, the intensity of the conflict in Shan and Kachin states may undermine the military’s
capacity to employ divide and rule tactics. If the military pushes too hard against particular ethnic
groups in armed conflict, other groups with ceasefire agreements may question their own positions
with the central government. The result would undercut a divide and rule approach and enhance a
degree of ethnic state unity of purpose.
While these trends bring into question the long-term sustainability of ceasefire agreements in
Myanmar, recent movements by Naypyitaw towards the signing of a national ceasefire agreement
may indicate improved prospects for peace.39
Leaders from 17 ethnic armed groups have held a
series of meetings in Thailand and Myanmar attempting to map out the critical elements of such a
ceasefire. Signing a national ceasefire agreement would help solidify the progress made on the 13
existing ceasefire agreements negotiated between the Union Peacemaking Central Committee and
individual armed ethnic groups. However, previous efforts at building upon ceasefire agreements
indicate that ethnic armies will not give up arms until key political demands are addressed. Reports
suggest that groups from Chin, Kachin and Shan states do not have confidence in the sustainability
of the ceasefire or the ability of ceasefire negotiations to address their federalist ambitions.
Despite positive government comments on May and June 2014 bilateral negotiations between the
KIA and government officials and the setting up of a peace monitoring commission, there has been
no lasting de-escalation to enable IDPs to return home.
A national ceasefire agreement may deliver a pause in armed conflict, but to establish a trajectory
of lasting security is unlikely without Naypyitaw finding ways to balance the expectations of rapid
economic growth with the need to avoid excessive, inequitable and unsustainable exploitation of
the rich natural resources in ethnic states. A failure to secure a lasting ceasefire and initiate a
political dialogue will likely result in armed ethnic groups targeting critical energy infrastructure,
such as pipelines, and the Tatmadaw taking countermeasures to secure the integrity of government
projects, which could include the military autonomously initiating pre-emptive strikes.
Stalled hope? 25
f) Land confiscation and environmental degradation
Risk Probability Impact
Land confiscation and
environmental degradation Very high High
The probability of land confiscation and environmental degradation occurring is assessed as
very high, and the impact on resource conflict is assessed as very high. The overall risk of land
confiscation and environmental degradation is therefore very high.
Over 65% of Myanmar’s population live in rural areas and depend upon subsistence farming and
forest resources to meet their basic needs. Agriculture, fisheries and forestry – mostly small to
medium scale – contribute 39% to the country’s GDP and employ approximately 70% of the labour
force.40
Upscaling rubber, palm oil and rice plantations is part of Myanmar’s agricultural
modernisation from subsistence agrarian livelihoods to large-scale cultivation of cash crops.
Furthermore, Myanmar’s river network, including the Salween and Ayeyarwaddy (Irrawaddy) rivers,
supports a huge array of ecological systems, community livelihoods, tourism, agriculture,
transportation and energy production.
Self-determination, federalism and local autonomy are repeatedly framed in the context of ethnic
states taking control of managing land and rivers.41
This is at odds with the unitary constitution’s
dictates of state ownership of all natural resources. Land confiscation and environmental
degradation, particularly by companies associated with the military elite, are likely construed as
denials of self-determination.
A number of UN and civil society reports have highlighted an increase in land confiscation across
Myanmar.42
The seizure of land from IDPs and subsistence farmers is facilitated by laws that enable
the reallocation of farms and forest land to domestic and foreign businesses and projects in the
national interest. The lack of a land titling system in an economic climate of rapid business
development is a significant risk for both farmers and businesses. The broad discretion afforded to
Nayphitaw’s departments and institutions to condone or support land confiscation without
adequate compensation has inflamed sporadic, local community protest.
While estimates vary greatly, it is thought that there are currently over 260 farmers in prison and
over 1,000 facing charges in relation to protesting against land confiscations. Some protest leaders
face long sentences, with the notable case of Ko Aung Soe, a member of the Yangon People's
Support Network, sentenced to 11.5 years in prison for playing a role in the Letpadaung mine
protests. The use of penal code provisions to manage usually peaceful protests by farmers over land
confiscation indicates the sensitivity of state agencies to land confiscation issues and the strong
desire to quell farmer dissent. In a 2013 address to Chatham House, Sein acknowledged that
challenges like land ownership are immense and extremely complex.43
26 Open Briefing
In 2013, the Parliamentary Farmland Investigation Commission delivered its first report to
parliament outlining the extent of land seizure by the military over recent years. The commission
received approximately 565 complaints alleging the forced seizure of land by the military. According
to the report most allegations related to the Ayeyarwaddy/Irrawaddy region. However, there is no
pressure from parliament for the return of unused confiscated land. The international audience is
presented with an image of reform and progress on national ceasefire agreements, yet land
confiscation blights the on-the-ground reality.
In addition to losing land through confiscation, rural subsistence farmers also face losing land
through environmental degradation. While not capturing the same level of attention as land
seizures, environmental degradation remains an issue for communities hosting small- to large-scale
hydrodam developments, large-scale commercial agriculture plantations (palm oil and rubber) and
extractives industries, such as mining, petroleum and forestry. While grievances over environmental
degradation are hard to disaggregate from broader political and economic grievances, protests
against multi-stage dam developments highlight the impacts on fishing activities and buildings of
significant cultural and religious significance in particular.
Local and international environmental NGOs have raised particular concerns about hydrodam
proposals on the Ayeyarwaddy. These groups suggest that multiple dams will prevent river
sediment moving downstream to enrich significant rice production areas on the deltas. According to
data from the Food and Agriculture Organisation of the United Nations (FAO), the Ayeyarwaddy
Division contains approximately 33% of the total rice harvesting area in Myanmar.44
Between 2002
and 2012, Myanmar produced on average 29 million tonnes of rice according to the FAO’s statistics
division.45
Alteration of river flow levels may also impact on the level of salt water inundation in low
lying deltas, which increases salinity in irrigation water, reducing productivity. Proposed dams would
also have an impact on inland river fisheries and subsistence fishing.
Existing copper mining projects at Monywa (Sabetaung, Sabetaung South and Kyisintaung),
approximately 10 kilometres northwest of Letpadaung copper mine, continue to create community
grievances over health impacts caused by acid mine drainage (AMD). The logging and clearing of
forest areas, which has been relatively high (between 1990 and 2005, 18% of all forested areas were
logged46
), is likely to escalate as larger-scale agricultural activities, such as palm oil and rubber
plantations, are established. Without appropriate environmental controls and governance, these
projects are likely to impact on subsistence agricultural activities and informal market agricultural
production. On a broader scale, Myanmar has already witnessed significant mangrove loss in the
Ayeyarwady Delta, which according to remote sensing data has declined from 2,623 square
kilometres in 1978 to less than 1,000 square kilometres in 2011.47
These environmental pressures
resulting from a lack of environmental management reduce the natural resilience of highly-
productive agricultural areas to natural disasters similar to Cyclone Nargis.
Stalled hope? 27
Section IV Conclusion
Myanmar’s reform process is attracting significant international attention. A range of international
actors, from international state-owned corporations and multinational corporations to development
banks and diplomats, see the strategic, human development and business opportunities presented
by Myanmar’s opening up.
For the all the positivity, there are stark challenges. Resource conflict remains a significant risk
for the country due to its high impact and its potential to interact with other threats, such as
socio-communal violence. Although the improved economic outlook and some reform initiatives
are tempering the potential likelihood of key resource conflict drivers occurring, the severity of the
potential impacts should they occur remains.
In most instances, resource conflict is likely to occur on the periphery of what the USDP perceive as
Myanmar’s future urban development and modernisation centre. However, if a peripheral ethnic
state is beset with poverty and resource conflict, it is likely to eventually reach into all the divisions
with broader implications for Naypyitaw. What may start as low-level local resource conflict – with
sporadic armed conflict, protests and project sabotage – could transfer into geographically-broader
conflict under certain conditions.
Future Union governments will face the challenge of delivering a certain pace of economic growth,
infrastructure development and poverty alleviation. This may manifest in pressure to offer
favourable investment conditions, embark on sweeping land reform or roll out large-scale projects
that do not account for local conditions. In a post-conflict society ‘too much, too quickly’ in terms of
resource development is likely to antagonise ethnic groups and local communities. It is a challenging
and delicate balancing act.
In addition to balancing the speed of economic development, Union governments will also need to
address demands from ethnic states for financial and governance devolution. Rapid opening up of
Myanmar to natural resource exploitation without sharing the windfalls will intensify calls from
ethnic states for a federalist structure. From a USDP perspective, providing increased revenue to
areas that have not experienced the presence of central government for decades is a significant
risk. However, the risks inherent in not providing greater financial autonomy to the states are
equally problematic for the USDP.
28 Open Briefing
Even in the event of resource conflict increasing, it is only a limited possibility that it would be
of such a magnitude as to stunt or derail Myanmar’s economic and political transition. The
Tatmadaw’s increasing advantage in military procurement and the USDP’s divide and rule strategy
means armed ethnic groups are going to be increasingly disadvantaged when it comes to armed
conflict. The political opening up of Myanmar has provided new opportunities for the Tatmadaw to
bring conflict with ethnic armies to an end or at least establish a viable containment strategy.
However, the economic lifeblood of Myanmar, in terms of natural resource projects, would remain
exposed to the evolving tactics of armed ethnic groups and their ability to inflict financial losses on
the central government.
Sein may have delivered a degree of stability through suspending projects such as the Myitsone dam
and has calmed the waters by maintaining dialogue with most ethnic groups. However, it is possible
that both the USDP and the military are consolidating their economic and military position in order
to develop a stronger hand against demands from the ethnic states for federalism and fiscal
devolution. In this sense, the cost of short-term stability is the possibility of low-intensity but
ongoing future violence.
Stalled hope? 29
References
1 Chhor, H et al. (June 2013) ‘Myanmar’s moment: Unique opportunities, major challenges McKinsey
Global Institute accessed at http://www.mckinsey.com/insights/asia-pacific/myanmars_moment,
and the Asian Development Bank (2012) ‘Myanmar in Transition: Opportunities and Challenges’
accessed at http://www.burmalibrary.org/docs14/myanmar-in-transition.pdf.
2 Levesque, J (2008) ‘Lords of Jade: Mismanaging Myanmar’s Natural Resources’ Institute of Peace
and Conflict Studies accessed at http://www.ipcs.org/pdf_file/issue/324228081IPCS-IssueBrief-
No60.pdf.
3 Global Witness (2003) ‘A Conflict of Interest: The uncertain future of Burma’s forests’ accessed at
http://www.globalwitness.org/library/conflict-interest-english.
4 Engvall, A and Linn, SE (2013) ‘Development, natural resources and conflict in Myanmar’ East Asia
Forum accessed at http://www.eastasiaforum.org/2013/06/13/development-natural-resources-and-
conflict-in-myanmar/.
5 Sun, Y (2013) ‘China’s intervention in the Myanmar-Kachin Peace Talks’ East-West Center accessed at
http://www.eastwestcenter.org/publications/china%E2%80%99s-intervention-in-the-myanmar-
kachin-peace-talks.
6 Changjiang Survey, Planning, Design and Research Ltd Co. (2010) ‘Environmental Impact Assessment
for Myitsone Dam’ accessed at http://www.scribd.com/doc/66851933/environmental-impact-
assessment-for-myitsone-dam.
7 See Report of the Special Rapporteur on the Situation of Human Rights in Myanmar, Tomás Ojea
Quintana A/HRC/25/64 at p. 8.
8 Shwe Gas Movement (2013) ‘Drawing the Line: The Case Against China’s Shwe Gas Project, For Better
Extractive Industries in Burma’ accessed at http://www.shwe.org/drawing-the-line/.
9 See UN COMTRADE Data accessed at http://comtrade.un.org/pb/FileFetch.aspx?docID=
4798&type=country%20pages.
10 Directorate of Investment and Company Administration, Myanmar Ministry of National Planning
and Economic Development ‘Data on Foreign Investment, Local Investment and Company Registration’
accessed at http://www.dica.gov.mm/dicagraph1.htm.
11 Ibid.
12 Keenan, P (2011) ‘Discrimination, Conflict , and Corruption - The Ethnic States of Burma’ Ethnic
Nationalities Council (ENC) accessed at http://www.burmalibrary.org/docs12/ENC-DCC-red.pdf.
30 Open Briefing
13
OECD and UNESCAP (May 2014) ‘Myanmar Business Survey 2014: Survey Results’ accessed at
http://www.unescap.org/sites/default/files/MBS_Survey_Results.pdf.
14 Arakan Oil Watch (2012) ‘Burma’s Resource Curse: The case for revenue transparency in the oil and
gas sector’ accessed at http://www.burmalibrary.org/docs13/Burmas_Resource_Curse%28en%29-
red.pdf.
15 Ibid.
16 Wood, J (2014) ‘Myanmar must step on the gas for fiscal reform’ accessed at
http://www.eastasiaforum.org/2014/02/14/myanmar-must-step-on-the-gas-for-fiscal-reform/.
17 Chalk, P (2013) ‘On the path of change: Political, economic and social challenges for Myanmar’
Australian Strategic Policy Institute accessed at https://www.aspi.org.au/publications/on-the-path-
of-change-political,-economic-and-social-challenges-for-myanmar.
18 UN General Assembly (2013) A/68/397 ‘Report of the Special Rapporteur on the situation of human
rights in Myanmar’ accessed at http://www.ohchr.org/Documents/Countries/MM/A-68-397_en.pdf.
19 Revenue Watch Institute (2013) ‘Country Profile: Myanmar’ accessed at
http://www.revenuewatch.org/countries/asia-pacific/myanmar/overview.
20 SIPRI Military Expenditure by country as a percentage of GDP 1988-2013 accessed at
http://www.sipri.org/research/armaments/milex/milex_database
21 Sommer, J (2013) ‘Myanmar’s Military: Money and Guns’ New Mandala accessed at
http://asiapacific.anu.edu.au/newmandala/2013/12/06/myanmars-military-money-and-guns/.
22 See http://portal.sipri.org/publications/pages/transfer/splash. Note the full data coverage for
2007-09 is poor and does not provide an accurate picture.
23 Note battlefield data contained in Nilsen, M (2012) ‘Will democracy bring peace to Myanmar’ 49
International Areas Studies Review 207 accessed at http://ias.sagepub.com/content/16/2/
115.abstract.
24 Aung Thu Nyein (2012) ‘Burma/Myanmar: Poverty Alleviation Initiatives Since 2010’ presentation to
"Myanmar’s Burma’s Regional Economic Integration: Socioeconomic and Environmental Challenges
and Risks" 2nd International Conference on International Relations and Development, Chiang Mai,
Thailand 26-27 July, 2012.
25 World Economic Forum (2013) ‘New Energy Architecture: Myanmar’ prepared in collaboration with
the Asian Development Bank and Accenture, Geneva. Accessed at http://www.weforum.org/
reports/new-energy-architecture-myanmar.
26 See http://data.worldbank.org/indicator/EG.USE.ELEC.KH.PC/countries/MM-BD-KH-PH-LA-
VN?display=graph.
27 Euronews ‘Suu Kyi: Myanmar sitting on unemployment ‘time bomb’ 1 June 2012 accessed at
http://www.euronews.com/2012/06/01/suu-kyi-myanmar-sitting-on-unemployment-time-bomb/.
Stalled hope? 31
28
Shift Project (2013) ‘Conducting Meaningful Stakeholder Consultation in Myanmar’ accessed at
http://shiftproject.org/sites/default/files/Conducting%20Meaningful%20Stakeholder%20Consultat
ion%20in%20Myanmar_1.pdf.
29 See World Bank data set accessed at http://data.worldbank.org/indicator/SP.POP.0014.TO.ZS/
countries/MM?display=graph.
30 United Nations Office on Drugs and Crime (2013) ‘Southeast Asia: Opium Survey 2013: Lao PDR and
Myanmar’ accessed at http://www.unodc.org/documents/southeastasiaandpacific/Publications/
2013/SEA_Opium_Survey_2013_web.pdf.
31 Mathieson, DS (2014) ‘Burma: the clash of church, state and society’ Open Democracy accessed at
https://www.opendemocracy.net/david-scott-mathieson/burma-clash-of-church-state-and-society
32 Nixon, H, Joelene, C, Saw, KPC, Lynn, TA and Arnold, M (2013) ‘State and Region Governments in
Myanmar’ Asia Foundation accessed at http://asiafoundation.org/publications/pdf/1249.
33 Ibid.
34 Wai, KS (2012) ‘Beyond Ceasefires: Myanmar’s Precarious Peace Process’ S. Rajaratnam School of
International Studies accessed at http://www.rsis.edu.sg/publications/
Perspective/RSIS0302012.pdf.
35 For more details on KIO conflict with the Tatmadaw see International Crisis Group (2013) ‘A
Tentative Peace in Myanmar’s Kachin Conflict’ Asia Briefing N°140 accessed at
http://www.crisisgroup.org/en/regions/asia/south-east-asia/myanmar/b140-a-tentative-peace-in-
myanmars-kachin-conflict.aspx.
36For more general information on IDP in Myanmar see International Committee of the Red Cross
(2013) ‘Myanmar: Stepping up humanitarian response to persistent needs’ (News Release) accessed at
http://www.icrc.org/eng/resources/documents/news-release/2013/07-08-myanmar-budget-
extension.htm. For the situation in Kachin, see Campbell, C (2013) ‘Far From Home and Fearing for
Their Lives, Burma’s Kachin Celebrate a Grim Christmas’ Time 24 December 2013 accessed at
http://world.time.com/2013/12/24/far-from-home-and-fearing-for-their-lives-burmas-kachin-
celebrate-a-grim-christmas/ .
37 Report of the Special Rapporteur on the Situation of Human Rights in Myanmar – Multiple reports
(A/68/397) (A/HRC/25/64) (A/HRC/22/58 – 8th Report (August 2013) accessed at
http://www.ohchr.org/EN/countries/AsiaRegion/Pages/MMIndex.aspx.
38 Fortify Rights (June 2014). “I Thought They Would Kill Me” Ending Wartime Torture in Northern
Myanmar accessed at http://www.fortifyrights.org/downloads/Fortify%20Rights_
Myanmar_9_June_2014.pdf. See also Human Rights Watch (2012) “Untold Miseries” Wartime Abuses
and Forced Displacement in Kachin State accessed at http://www.hrw.org/sites/default/files/
reports/burma0312ForUpload_1.pdf
32 Open Briefing
39
For a review of political reform and the consequences for ethnic conflict, see Transnational
Institute and BCN (2013) ‘Political Reform in Burma/Myanmar and Consequences for Ethnic Conflict’
accessed at http://www.tni.org/briefing/political-reform-burmamyanmar-and-consequences-ethnic-
conflict. See also Burma News International (2013) ‘Deciphering Myanmar's Peace Process: A
Reference Guide’ accessed at http://www.burmalibrary.org/docs14/Deciphering-Myanmar-Peace-
Process-ocr-tu-red.pdf.
40 Alley, P (2013) ‘Essentials: Transparency and Accountability across the Resource Chain’ in Natural
Riches? Perspectives on Responsible Natural Resource Management in Conflict-affected Countries,
World Economic Forum accessed at http://www3.weforum.org/docs/WEF_GAC_NaturalRiches_
ResponsibleNaturalResourceManagementConflictCountries_Report_2013.pdf
41 For further details see Dapice, D and Thahn, NX (2013) ‘Creating a Future: Using Natural Resources
for New Federalism and Unity’ The Ash Center for Democratic Governance and Innovation, Harvard
University accessed at http://www.ash.harvard.edu/extension/ash/docs/creating.pdf.
42 Karen Human Right Group (2013) ‘Losing Ground: Land conflicts and collective action in eastern
Myanmar’ accessed at http://www.khrg.org/2013/03/losing-ground-land-conflicts-and-collective-
action-eastern-myanmar
43 Sein, T (2013) ‘Myanmar’s Complex Transformation: Prospects and Challenges’ Chatham House
accessed at http://www.chathamhouse.org/sites/files/chathamhouse/public/Meetings/
Meeting%20Transcripts/150713Sein.pdf.
44 See Food and Agriculture Organisation of the United Nations data accessed at
http://www.fao.org/docrep/005/y4347e/y4347e18.htm.
45 See Food and Agriculture Organisation of the United Nations country data set accessed at
http://faostat3.fao.org/faostat-gateway/go/to/browse/Q/*/E.
46 Rao M, Htun S, Platt SG, Tizard R, Poole C, Myint T, Watson JEM (2013) ‘Biodiversity conservation
in a changing climate: A review of threats and implications for conservation planning in Myanmar’
(2013) 42 AMBIO: A Journal of the Human Environment 789.
47 Webb, EL, Jachowski, N, Phelps, J, Friess, D, Than, M and Ziegler, A (2014) ‘Deforestation in the
Ayeyarwady Delta and the conservation implications of an internationally-engaged Myanmar’ 24
Global Environmental Change 321.
